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TMI Blog1991 (4) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... used by the assessee for her business and, hence, no income is exigible to tax under the head "Income from house property". Secondly and alternatively, the annual value determined by the ITO is very much on the high side. 4. None of the aforesaid arguments found favour with the CIT(A), who dismissed the related grounds of appeal. 5. Shri G. Sitharaman, the learned counsel for the assessee, contended that the lower authorities were not justified in negativing the assessee s claim. He sought to argue that the property was being used for the purpose of assessee's business and hence, no income is exigible under the head "income from house property" Secondly, owing to the assessee's absence from India, she was not able to occupy the property; that consequently she did not derive any income from this property, and that, therefore, the income from property should be taken at nil. 6. Thirdly, in any event, the lower authorities were not justified in not adopting the value placed on the property by the Municipal Corporation for determining the property tax payable by the assessee in respect of the flat in question. 7. Shri. G. Natarajan, the learned Departmental Representative, str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property. The focus is clearly on the ownership of the property. Consequently, the fact that the owner of the property receives no income in fact, even that there is no possibility of any income being received, (as for example in the case of self-occupied property) is irrelevant for the consideration of the question : what is the artificial or statutory income of an assessee from house property? 'this would mean that even in a case where the property is occupied by the assessee, the annual value of the property has to be determined and brought to charge under the head ' Income from house property'. 13. Sec. 23(1) of the Act stipulates inter alia, that for purposes of s. 22, the annual value of any property shall be deemed to be: (a) the sum for which the property might reasonably be expected to let from year to year; or (b) Where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in cl. (a), the amount so receivable. The flat in question was occupied by the assessee herself and, hence its annual value will have to be determined under s. 23(1)(a). 14. It is Ex facie clear from the section th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n upper limit on the rate of rent for which a building can reasonably be expected to let." 18. In Padma Debi's case the standard rent of the building had been fixed under the provision of the West Bengal Premises Rent Control (Temporary Provision) Act, 1950. The question that arose for consideration was whether, for the purpose of levying house-tax under the Municipal Act of 1923, the annual value could be determined at a higher figure than the standard rent fixed under the Rent Control Act. And, as we have seen just now, the Supreme Court held tha the annual value could not be fixed at a figure higher than the standard rent. 19. The case of corporation of Calcutta vs. LIC AIR 1970 SC 1417 also related to a building governed by the West Bengal Premises Rent Control (Temporary Provisions) Act., 1950; but the standard rent of the building had not been fixed under the said Act. The question that arose for consideration was, whether, in such circumstances, for purposes of levying house tax the annual value could be determined at a figure higher than the standard rent that could be fixed under the Rent Control Act. Applying the principle of the decision in Padma Debi's case, the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in excess of fair rent. 25. In the before us the assessee purchased the new flat in 1980. No doubt, she was herself occupying the flat. Even so, the annual letting value of the flat must be determined for purposes of computing the assessee s income under the head property. since s. 30 of the Tamil Nadu Buildings (lease Rent Control) Act., 1960 takes the new flat out of the purview of the Act for five years, the question of treating the" sum for which the property might reasonably be expected to let from year to year" as being equal to the fair rent fixed under s. 4 of the Rent Control, Act does not arise. It should, therefore, allow that the sum for which the flat in question might reasonably be expected to let from year to year will be the contractual rent which, in its turn, depends on a host of factors such as fair return on the investments, rent of properties in the neighbourhood similarly situated with similar advantages the nature and the type of construction, the premium if any, which such flats command in the neighbourhood and the like. 26. This brings us on to Shri G. Sitharaman's contention that even if its is presumed that the assessee could charge contractual ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r way if there was any material to indicate that the ratable value, which was fixed by the Corporation and which was adopted as the starting point by the assessee, was fixed without taking into account the large outlay on the improvements to the property. 29. Thirdly, there is nothing in the said report to indicate that in each and every case the annual letting value determined by the municipal authorities is the sole test of determining the annual letting value of the building for income-tax purposes. 30. The Allahabad case of Smt. Radha Devi Dalmiya vs. CIT (1980) 17 CTR (All) 67 : (1980) 125 ITR 134 (All) may be noticed next. There the assessee constructed a house for Rs.1,90,000 and showed in her return a sum of Rs.8,700 as the annual letting value which was determined by the municipal authorities on an expected return of only 3 Per cent. The ITO determined the annual letting value at Rs.18,000 taking into consideration the investment made by the assessee and the likely return on the investment. The AAC fixed the annual letting value at Rs.14,000 on the basis of a fair return of 7 Per cent on the investment. The Tribunal affirmed the order of the AAC. The High Court decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the locational advantages of the flat, and the reasonable return on the capital invested for purchasing the flat and the like, we hold that it will be reasonable to estimate the monthly rent at Rs.650. The Assessing officer is directed to recompute the income chargeable under the head 'Income from house property' adopting the said monthly rent of Rs.650. 34. Issue No. 2 Interest on Compulsory Deposit The assessee did not return any interest on compulsory deposit. Holding that "the assessee should have received this interest" the ITO brought to tax a sum of Rs.1,880. The CIT(A) declined to interfere in the matter. 35. Shri. G. Sitharaman contended that the assessee was not following mercantile system of accounting and that consequently she was returning the interest received on cash basis. Our attention was drawn particularly to the fact that interest on the compulsory deposit was received and disclosed in the subsequent year of account. 36. We consider that the points urged by Sri Sitharaman are well taken. We, therefore, delete the addition. 37. Issue No. 3 Addition for low withdraw towards person expenses The ITO found that the assessee had not shown any drawings ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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